'Buyer's club' for insurance to be studied

Baltimore officials have agreed to fund the development of a rate plan for a proposed auto insurance "buyer's club" that it is hoped would sharply reduce rates paid by city residents.

Richard Krummerich, special assistant to Mayor Kurt L. Schmoke, told the Board of Estimates yesterday that only the paperwork needs to be completed on the $33,000 contract with R & B Unlimited, a Baltimore-based research firm. He said the contract will be ready next week to submit to the board, which has said it would approve it.

If the study, which is to include proposed rate structures, indicates that significant savings could be achieved, the city would be willing to provide additional money to set up the club, according to Mr. Krummerich.

Leslie L. Ransom, president of the company, said that he expected to have the plan completed within 120 days and that three insurance firms had expressed interest in writing policies.

Mr. Ransom said the proposed club would be similar to an arrangement the American Association of Retired Persons has with the Hartford Insurance Co. to provide insurance to its members at reduced rates.

The Baltimore buyer's club would be open to any city resident who belongs to a community association and meets the underwriting guidelines for safe driving records, Mr. Ransom said. He said he would expect as many as 15,000 people to participate in the club in the first year.

Members of the club, which could be ready to go by fall, would have their premiums reduced by an average of 20 percent, he said.

City drivers pay an average of about $1,300 per car for insurance -- about twice what their suburban counterparts pay.

City officials have tried unsuccessfully for years to change state law that allows insurers to charge rates based on where people live. They contend that the so-called "territorial ratings" are in effect a hidden tax that contributes to middle-class flight from the city and makes it difficult for low-income residents to maintain a car for travel to jobs outside the city.

Last year, a Baltimore citizens group filed a complaint with the state Human Relations Commission, contending that the practice of territorial rate setting was racially discriminatory.

A. Robert Kaufman, head of the City-Wide Insurance Coalition, a citizens group that has long pushed for lower rates, called the city's agreement to fund the plan "a victory."